Resource Library: Strategies to reduce costs - Articles




Cost reduction is just about the most effective and fastest way to ramp up profits because when you save a dollar, you have to share it with nobody (except possibly the taxman)!


The Web – Poised To Be The Key Research Tool To Find Local Products And Services

Time To Re-Skill Yourself On The Basics Of Negotiating

Why You Should Encourage Staff To Teach Others

Watch Your Bank Statement For Charges!

The CENT-A-METER ™ Will Save Ya!

How To Charitably Handle Phone Requests For Donations

Afraid To Collect Your Own Money?

How Much Money Does a Mistake Cost?

Ever Heard Of A Recapture Agreement?

Insurance Premiums Predicted To Rise In The Medium Term

A Few Canny Cost Saving Ideas

Time To Record Your Business & Home Possessions

Lighten Your Printer Costs

Charge For Customer Costs




The Web – Poised To Be The Key Research Tool To Find Local Products And Services


If your business draws customers from a limited geographic region you may want to take note of this recent research.

According to United States-based consultancy group, The Kelsey group, 70% of customers now use the Internet (and particularly the search engines) as a way of finding and researching local products and services. This is up 16% since October 2003.

The Kelsey group believe the Web is now poised to overtake newspapers and Yellow Pages as the reference of choice when seeking information about local and regional services.

A few thoughts:

Think about upgrading your present website to include local and geographic references. Expressions such as "proudly providing XXX services to be XXXX region" will be picked up by the search engines. Make sure you register on any and all community web sites within your geographic base. If your local Chamber of Commerce has a web site, make sure you are a participant in as many product and service categories as is possible. Make exclusive offers to your geographic base and change them frequently.

Final thought: Irrespective of what you may, or may not think about the Web, it is a permanent and growing medium. Certainly, the younger generations use it extensively – a number of them would never have heard of, or used, the Yellow Pages. It is a changing of the guard.

Source: Positive Business Newsletter



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Time To Re-Skill Yourself On The Basics Of Negotiating


Right now, is an appropriate time to re-skill ourselves in the basics of negotiation. When it’s all said and done, that’s exactly what you are doing whether you are buying or selling and as I’ve said ad nauseam the better you are as a negotiator the more you will get and achieve out of life.

Long time subscribers would be aware of our four page negotiation template which formalizes the negotiation process and forces the user to focus on the outcome. The outcome is better achieved when you are planned, know the outcome you desire as well as the minimum position you will accept and have considered the circumstances of the people you are negotiating with. You’ll find a copy of this template in the "Useful Template Documents" section of this website.

If you’ve got any negotiating matter pending, you’ll do much better if you can formalize, in writing, the answers to these questions in advance.

Why are they negotiating with me?
What are their time constraints and deadlines?
How - and by whom - will the decision be made?
What is their negotiation style?
How do they react to conflict?
What are the limits to their authority?
What is their negotiating experience and background?
Do they have a realistic alternative to making this deal?
What incentives do they have to make this deal work?
What are their underlying interests and concerns?
What’s their track record for honesty and integrity?
What are their expectations as far as the outcome of this negotiation?
Do they have a budget?

Source: Positive Business Newsletter



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Why You Should Encourage Staff To Teach Others


Research has the answer in the form of the following:

People retain:

10% of what they read
20% of what they hear
30% of what they see
50% of what they see and hear
70% of what they discuss with others
80% of what they experience personally and
90% of what they teach to others

Source: Joy At Work, Dennis W Bakke as reported in Positive Business Newsletter



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Watch Your Bank Statement For Charges!


In tougher economic climates, the big bears of business (the banks) in Australia and New Zealand go looking for alternative revenue sources to prop up falling revenues in other areas (slowing housing market). In a business sense, that’s a smart enough strategy, except that in this case, they make their "buckaroos" out of us!

Finance industry sources tell me there’s a fair bet the big banks will look at increasing fees and charges. Why? Because no one bothers to check them all that thoroughly, that’s why. We gullibly assume that they are correct because they have computer systems in place to make sure they are right. Right?

Wrong!

Watch good old Ray Martin of A Current Affair for a year and you can be guaranteed to find at least three or four stories of the banks "ripping" off someone. Now Ray and his team are masters at playing the sympathy strings, but it’s true to say that the banks do make mistakes. Witness the admittance to a $10 million overcharge at the NAB recently.

So, check your bank statements carefully. Also, be aware of a new service launched by accounting body CPA in conjunction with financial services group, Cannex. Known as the CPA Cannex Small Business Finance Indicators, it will give business owners and managers a better overview of the market and a better understanding of the interest rates and fees they are paying.

The indicators also include a calculator that highlights the impact of monthly fees on loan repayments. Very interesting. Check it out at www.cpaaustralia.com.au

Source: Positive Business Newsletter



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The CENT-A-METER ™ Will Save Ya!


Now that winter is upon us, chances are that the electricity bill is whirring away. Hey come to think of it, that’s also the case in summer too!

A smart little Aussie invention known as the CENT-A-METER™ will save you money by making you and your staff aware of electricity usage and its cost. Yep, it’s an electronic device which measures business and domestic electricity use and displays the cost per hour on a portable display located inside the home or small business. You’ll quickly come to realize which items of plant and equipment are the energy guzzlers.

And the greenies and tree huggers will swoon with delight when they can also interpret the greenhouse gas generated!

Seriously, at around $200, this little monitor can install good work practices that will save you money and save the environment at the same time.

A number of subscribers have installed them and are pleased with the results. Go see www.centameter.com.au

Source: Positive Business Newsletter



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How To Charitably Handle Phone Requests For Donations


Subscriber Susie Warenyia of Suzy’s Fine Jewellery in Warragul has an issue which is common to most business owners – how to politely handle people who ask for donations, because it’s a very, very common occurrence and it is impossible to give to everybody.

Okay…let’s get one issue out of the way immediately. Australian and New Zealand businesses are extremely generous – the Boxing Day tsunami proved that.

That said, charitable phone canvassers are good at what they do…and they’re insistent.

Some thoughts:

Donations should be treated like any other expense – so budget for it based upon your own charitable beliefs.

If you have a list of charitable institutions which you like to support, agree at the start of the year what you will allocate to them out of your budget.

Have a policy in place as to how you will allocate donations. For example, donations will only be made to established local charities and at least two people must agree to allocate the funds from the budget.

Practice saying something like this to telemarketers: "Of course we would like to support you and all other charities who call, however, we do have a firm policy in place and each year we allocate our donations budget to select charities. If you would like to be considered for inclusion in next years charities, please send me your details."

Now, the request that is not easy to handle is the request by a customer to support his or her local function. Brisbane Butcher, Rowdy Purcell, came up with a novel approach to this which also aided his marketing. Rather than make a donation of the obligatory meat tray, Rowdy had a stack of incentive coupons printed which could be handed out to every attendee.

Think laterally, like Rowdy, and work out what you could do to offer an advantage to the local charity and yet promote your business in a mote positive way than simply having your name on the advertising bunting.

Source: Positive Business Newsletter



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Afraid To Collect Your Own Money?


A couple of issues ago we ran an article about credit control and the need to tighten up as we move into more sober economic times. This prompted a call from an accountant who freely admitted that he was afraid of asking clients for payment…and he is not alone…there are many people who shirk this duty. So, they do a dumb thing, they give this duty to the untrained junior! Then they wonder why collections are slow.

Is this situation a fear of rejection? Probably.

Is it a fear that the customer will get incensed and go elsewhere? Possibly.

Or is it, as I posed to the accountant, his feeling that the client may not see the value in the fee and be aggressive on the issue?

Yep...this was the major reason…because when I asked him would he feel differently about asking for the money if he had delivered awesome service and awesome advice at a price that he knew the client to consider fair, his answer was that he would be prepared to be sit in the client’s office and demand the money!

Now there are a number of issues behind this – and doesn’t this demonstrate that within a problem (debt collection) there is another problem (fear of whether real value has been delivered) and within that problem lies the REAL problem (failure to adequately demonstrate to the client the real value they have received for the money as charged).

The solution with the accountant was simple: Involve the client in the preparation of the bill up front and then make a phone call to the client at the point of sending the account so as to fully explain the value as received. Oh yes, do you think this call is the perfect opportunity to ask for payment on credit card? Yes it is and already I have heard from this guy…the system is working.

Moment of Truth

If your debtors (people who owe you money) are higher than you would like, is this because:

your collection system is too haphazard? you have the wrong person attempting to collect the money? the person collecting the money is tentative because they have a feeling that the client has not got value for money?

The answers to all of these issues resides with you, dear reader, and until you confront them head on and make changes, get set to see your debtors balance blow out even further. Study the common sense in the business lesson below.

Source: Positive Business Newsletter



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How Much Money Does a Mistake Cost?


How much time is spent re-working orders that weren't delivered the way the customer wanted them?

Re-doing letters, invoices, memos, presentations?

Are errors such as these ever investigated so as to determine the costs of correction?

Surely, such a review would be worthwhile so that all in the business can understand the real costs of mistakes. After all, we can only appreciate that which we can comprehend. Presently there is a good chance that your team have no idea of the real costs of mistakes…until you show them in black and white.

Source: Positive Business Newsletter



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Ever Heard Of A Recapture Agreement?


Situation: you send a staff member to an expensive training course and one month after the course, that person resigns because they have accepted a job with one of the attendees at the same course! This actual situation has happened to one of our subscribers and you can imagine how they felt.

Not only was the training money wasted, but that extra knowledge and skill set is now working in the business of one of the competitors!

Perhaps in these circumstances, and it isn’t a rare circumstance, a Recapture Agreement might be of value. I haven’t personally seeing the wordage of such an agreement but the spirit of it is as follows:

The employer will pay the full amount of the training cost upfront and will wear 100% of these costs provided that the employee remains with the business for a specified period of time. Should the employee resign, for whatever reason, inside the specified time period, then s/he will where a proportion of the training costs as will be agreed between the parties.

Commercially it makes sense and if anybody has used such an agreement I would appreciate a copy of it.

Source: Positive Business Newsletter



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Insurance Premiums Predicted To Rise In The Medium Term


Despite large profits occurring in their investment portfolios, Australia’s insurance companies are showing few signs of reducing insurance premiums and that’s a pity, given that premiums have risen between 15% and 35% in recent times.

For many, right now is the research and negotiation time for all policies due to be renewed and take effect as and from first of July 2005. For these people, the bog basics still apply:

shop around, be aware of your risk profile and be prepared to reduce these risks for your insurer (by assuming some of the risk via higher excess limits), select an insurer who knows your industry and insure yourself at the appropriate level.

On the last point, be aware that the Insurance Council of Australia estimates that some 34 per cent of small businesses are under-insured or uninsured – doubtless, many of them through ignorance.

And finally, I just love this comment in a recent issue of Business Review Weekly – "if businesses are not aggressive in their search for lower premiums, the only benefit they can expect from insurers is better service."

Source: Positive Business Newsletter



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A Few Canny Cost Saving Ideas


With the popularity of mobile phones, could a case exist to consider reducing the number of phone lines you have in your business? With line rentals around $30 per month per line this adds up to a reasonable annual saving. Ban boring "with compliment" slips unless you can include a marketing message of some significance. Message: "with compliments" should make you money – not cost you money.

Source: Positive Business Newsletter



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Time To Record Your Business & Home Possessions


With insurance companies increasingly wanting to see proof of purchase and utilization of various assets and items of equipment before they will pay out on a claim, it’s smart to put your digital, Polaroid or DVD camera to good use by snapping vital pictures of what’s what in the business (room by room). Snap items of equipment, pictures, in short, whatever you feel will give a person a good view of how your business or home looked – and what it contained - at a particular point in time.

Then keep a copy of this off premises. I’d suggest that this should be done every six months and no longer than every twelve months.

Go on…play Steven Spielberg for an hour or so and create a visual impression of your business and home. Additionally, why not take a photocopy of all your credit cards, drivers licence, passports etc. Then you’ll have a record of these as well, should they go astray.

Source: Positive Business Newsletter



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Lighten Your Printer Costs


A simple way to reduce your in-office printing costs is to reduce the amount of toner your photocopiers use. Many newer photocopiers can provide sufficiently dark tones with less toner.

Experiment with the lightness-darkness setting. Print out copies at several different settings and compare. With a lighter setting that produces adequate definition you may find that over time you’re able to reduce toner costs by half.

Source: PrintingIQ as reported in Positive Business Newsletter



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Charge For Customer Costs


One of the most common leakage areas in most businesses is that they do not charge for the costs of attending to the little bits and pieces on behalf of customers.

For example, many professional practices do not charge for phone costs, postage, freight etc.

Medical and veterinary practices often fail to charge for the small – but necessary - costs of bandages, plastic gloves and other consumables.

Then there are many charges that we business people wear as part of environmental and occupational health and safety issues.

These little costs eat away at your profitability.

Why not consider a set levy to cover these charges?

The professionals call it "out of pocket" expenses.

Make this standard charge smallish in amount so that it really doesn’t gather attention.

Whatever you do, make sure that your staff both agree with the rationale behind such a charge and that they can easily handle the matter if asked by a customer.

Is it worth doing? Absolutely. One of our coaching clients will generate an additional $16,000 in profitability this year from this idea alone. How long did this take to discuss and implement? About three hours. That’s not a bad return on the time invested.

What small costs are you wearing on behalf of customers that you can legitimately pass on to the customer?

Source: Positive Business Newsletter






Business Revamp  l  Phone: + 61 (0)3 9551 7742  l  E-mail: info@businessrevamp.com.au










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Costs - Articles